UBA Kenya’s controlling firm, UBA Group PLC, has committed to investing $150 million or KES 19.3 billion in the Kenya roads bond, which aims to offset debts in the road construction sector and revive over 580 stalled road projects in Kenya through securitization. The bond is anticipated to raise KES 175 billion, with UBA Group’s pledge accounting for 11% of the target.
Securitization is the pooling together of financial assets such as loans, mortgages, cash flow generating assets and converting them into tradable securities like bonds which investors can buy. Investors earn returns from the cash flows. In this case, the fuel levy.
Investors in the bond are set to be paid using the collections of KES 7 per litre of diesel or petrol from the Roads Maintenance Levy Fund. Earlier last year, the government increased the levy by 38.9% to KES 25 per litre from KES 18 per litre.
The Chief Executive Officer of the Nigeria-based firm said that the group is committed to extending support for Kenya’s infrastructure goals and Africa at large.
“UBA remains an unwavering partner for Africa’s progress. Our $150 million infusion into Kenya’s roads levy securitization programme is testament to our unshakable confidence in our country’s potential,” said UBA Group Plc Chief Executive Officer, Oliver Aluwaba.
UBA Group’s Subsidiary Remarks
UBA Kenya Bank, a subsidiary of the UBA Group, said that the financial support by the parent firm aligns with the commercial lender’s strategy of becoming a reliable partner for infrastructure. UBA Bank Kenya Managing Director, Mary Mulili, said that the financial commitment by the Group cements the lender’s role as a trusted ally to the Kenyan government, businesses and communities.
Benefits of the Securitization
The move through the special purpose vehicle means that the government will not allocate over KES 100 billion in the fiscal year 2025/2026 to settle road debts. Taxpayers won’t pay new levies or taxes to support the framework. Enhanced economic activity through resumed construction activities and regain contractor confidence.
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